“The model now is that you have highly paid physicians who are highly specialized, and you don't want to move them around that much because moving around costs money,” Burgess says. “That's an ongoing tension in the healthcare space.”
Texas Health Resources, Arlington, understands that inherent discomfort. “The term is demand destruction,” says Jonathan Scholl, executive vice president and chief strategy officer. “We realize that we have to accept the destruction of demand for acute-care services.”
The 25-hospital system has grown its outpatient services on a number of fronts. And it expects that side of its business to keep growing. The system now attributes 39.6% of its revenue to outpatient care, compared with 36% in 2011.
“It's tempting to fall back on our roots,” Scholl says. “But we are asking ourselves the question of how do we keep people out of this place?”
It's a new shift for hospitals to try to keep patients out of their facilities, but providers have changed the way they view their role in the community. “We're no longer a hospital company; we're an integrated delivery system,” says Drew Rector, executive vice president and chief strategy and growth officer at Health First, Rockledge, Fla.
Rector stepped into the new position earlier this year to focus on what he described as “strategic development of clinical delivery platforms.” As part of his role, Rector is also heading the system's new outpatient and wellness division, which puts all of those services under a single reporting structure.
“We feel like we've been preparing for the future,” Rector says, adding that the increased focus on outpatient and wellness is “to prevent unneeded admissions, decrease the cost, increase patient satisfaction and (adapt to) changes in reimbursement.”
As the investment in outpatient services grows across the industry, there's less consensus about what will happen to demand on the inpatient side—with some systems projecting flat or decreased revenue growth while others expect population expansion and an aging demographic to keep beds filled.
The Wharton School's David says hospitals have steadily reduced the number of inpatient beds as the average length of stay has been shortened and outpatient care has spiked. “Hospitals have been decreasing their capacity very dramatically over the last two to three decades,” he says. Acute-care facilities “don't have to be as large.”
At the same time, those patients who are admitted are almost uniformly sicker and require more complex care than in the past. And hospitals are still spending significant amounts of capital to maintain their acute-care facilities. “It's more an 'and' strategy than an 'or' strategy,” Deloitte's Cohen says. “What you're having is additional capital spending rather than (a shift in) capital spending.”
And that means independent hospitals are pursuing more partnerships, including more untraditional alliances, as well as seeking to join larger systems to gain access to the capital they need, Cohen notes, adding that private equity firms are also becoming more active in the sector.
But not all partnerships have been financially motivated; others are about acquiring new skills. Texas Health Resources earlier this year forged a 10-year agreement with Franklin, Tenn.-based wellness company Healthways. The partnership includes health management tools that physicians can share with patients in their offices as well as new services at the system's facilities that promote lifestyle changes, such as physical fitness.
In July, the system also formed a joint venture with LHC Group, Lafayette, La., and Methodist Health System, Dallas, to coordinate home health services with the aim of ultimately reducing readmissions.
Scholl notes that the need to account for cost and quality requires systems to have greater control over the entire spectrum of care, from promoting wellness and prevention to offering post-acute and home health services.
“It's a drive to deliver more accountable care,” he says. “We're now necessarily and willingly and enthusiastically thinking about the patient when they're not a patient.”
TAKEAWAY: With reimbursement models changing, forward-thinking hospitals and health systems are maximizing advantages of expanded outpatient services.